Samsung to Invest $1.2 Billion in ‘Internet of Things’ Startups and Research in U.S.

South Korean electronics giant plans to split funds evenly between R&D and other startups

WASHINGTON—Samsung Electronics Co. said Tuesday that it will invest $1.2 billion in the U.S. over four years to boost technologies aimed at adding computing power to everyday devices, a movement dubbed the “internet of things.”

The South Korean electronics giant said the funds would be split evenly between internal research and development and investments in other startups. Executives said the funding announcement marked a continuation of Samsung’s increasing openness to partnerships and strategic investments, which it long shunned.

Samsung had announced prior initiatives around the internet of things. But executives said the new funding represents an acceleration of the company’s attempt to compete with Intel Corp., Qualcomm Inc. and others to create chips and other hardware that manufacturers can incorporate into gadgets to make them internet-connected. Predictions vary widely, but IDC has forecast that the global internet of things market will be worth $1.7 trillion by 2020.

Samsung’s investment will be aimed at a variety of internet-of-things applications, including digital health; “smart machines” such as drones, robots and autonomous vehicles; and companies making software to process the massive data produced by these devices, said Young Sohn, Samsung’s president and chief strategy officer.

Samsung last week said it would acquire Joyent Inc., a San Francisco company that rents the use of computer servers and data centers to other companies. Last year, Samsung announced a set of technologies, called Artik, to connect objects and computing power to support those objects.

The $600 million in internal investment will go to Samsung’s two U.S. research facilities in Silicon Valley, where it will focus on technology for powering the internet of things—such as chips and products—for existing markets.

Samsung is the world’s leading manufacturer of smartphones, televisions and memory chips, but has been seeking new markets as its growth has slowed and its market share in mobile devices eroded.

Samsung’s outlay for the internet of things is large by industry standards but a fraction of the electronics giant’s $14.1 billion in global R&D spending in 2015, second only to Volkswagen AG’s $15.3 billion R&D outlay, according to PricewaterhouseCoopers.